What we learned our first semester and how you can help empower the next generation of leaders in impact investing.

Last year we created Profit with Purpose with a mission to educate, connect, and empower students to think about investing differently. We do this through workshops, building relationships, and providing experiences in impact investing. Check out an overview of what we accomplished in our first semester.

We experimented plenty and figured out what worked and what didn’t. Here’s what we hypothesized and what actually happened:

There’s an outspoken demand from all types of students to learn more about careers in doing well and doing good.

This semester, our applicant pool grew both in quality and quantity (3x). When interviewing, we focused on three things: diversity, passion, and competence. After a quick and rigorous selection process, we welcomed our new members to grow with us this semester. Our cohort is 40% women, almost an even split between underclassmen and upperclassmen, and no one school (Commerce, Arts & Sciences, Engineering, etc.) makes up more than 25% of our membership. Diversity is something many business related organizations at the University struggle with, we believe it enables us to identify blind spots we miss throughout our program and is imperative with what we hope to accomplish in impact investing. This awesome work couldn’t have been done without our Outreach team led by Trisha Sinha.

If members attend our workshops and complete activities, then they’ll have a worthwhile experience.

While partially true, we we’re mostly wrong. We learned plenty on what it means to teach. Finding the right balance of content, activities, and practitioner engagement is something we continue to iterate. We’ve revamped the way we do workshops, working sessions, and all the events in-between. We also struggled with engagement. This stemmed from a larger issue of community-building. There’s a pervasive culture of competition that deepens silos throughout the university, especially with anything business related. We didn’t do a good job of negating it and have taken concrete steps to construct a better community through fostering trust and transparency. We’re upfront with where we are with the growth of our organization, encourage constructive feedback at every opportunity, and facilitate a program which encourages collaboration and relationships. I’m thrilled for the semester Sajal Rohatgi and team have in store.

Alumni, professional organizations, and the University will be more than willing to support Profit with Purpose.

This was true on many fronts and we learned plenty about what it meant to work with people outside our organization. Being professional, specific, and communicating the value-add has been important in our strategy of finding mentors to support our members, inviting experts to speak on panels and during events, and supporting entrepreneurs through our due diligence program.

Last semester, investors like Paul Nolde of New Richmond Ventures, David Touve of the iLab at UVA, and John Griffin of Blue Ridge Labs spoke to our community on the importance of supporting scalable and sustainable solutions to complex social problems. Entrepreneurs like Chip Ransler of Husk Power Systems and Alex Goodman of 118 Capital came to share their stories and analyze our impact investment pitches. Practitioners are a crucial part of our program and we hope to continue inviting these pioneers to engage with our community.

That’s what we’ve been up to! If you’re excited and would like to support our mission of empowering future leaders in impact investing, here are a few ways you can help:

- If you’re a professional working at an impact investing organization, please consider being a mentor to one of our members. This is a low commitment opportunity that can span career, project, and general life advice! Please reach out to our Director of Outreach, Trisha Sinha or comment below.

- If you lead an impact investing organization, come talk to us about the partnerships we’re looking to build. This involve providing insights on our curriculum, co-sponsoring an event, or facilitating an in-person company visit. Please reach out to our Co-President, Ady Sethi or comment below.

- If you’re an entrepreneur in healthcare, energy, financial inclusion, agriculture, or education and would like to work with a team of trained undergraduates who can analyze your venture’s case for investment readiness, please reach out to me, Mohammad.

We’re incredibly excited for the road ahead and thank all the support from SE@UVA, 118 Capital, Village Capital, and the many more who continue to inspire, advise, and join us!

I spent my day in NYC volunteering at SOCAP’s new initiative: The Good Capital Project. Here’s my take on what it was and why it mattered.

What was the Good Capital Project?

Social Capital Markets Group (SOCAP) holds an annual conference for the social impact space. It’s HUGE. Almost 4000 entrepreneurs, investors, and field-builders. The purpose of the convening was two-fold, to bring a wide range of stakeholders together from all over the world and to demonstrate that the impact market was alive and growing. That was then.

Today, the impact investing market is evolving; It is in need of coordination, setting up plumbing, and replicating what works in order to reach scale. That’s what the Good Capital Project was for — breaking down the silos where individual players were making progress and creating more room for collaboration. It was convening of players from all ends, from entrepreneurs and VCs to development institutions and Wall Street aimed at unlocking the trillions of dollars in the capital markets. — Kevin Jones, Co-Founder SOCAP

It was different from any other conference I’ve been to. After the keynote, instead of breaking out into smaller groups for another keynote, we used design thinking to brainstorm solutions to grand challenges in impact investing. What does that mean? We spent a ton of time in cross-disciplinary groups asking questions and understanding new perspectives.

These were the challenges:

1. Creating Shared Understanding                              

2. Enabling the Entrepreneur

3. Impact Management and Metrics

4. Efficient Product and Distribution

5. Investable Solutions

6. Legal Structure and Policy

What did I learn?

Impact Investing is not and should not be associated with concessionary or below market level returns.

Reports administered by banks and academia have showcased market and above-market returns by a number of investments across the spectrum of early stage venture capital to larger institutional investments. The conversation is moving towards scaling the proven products and processes of impact investing. New movers must be sure to not mistakenly associate investing with concessionary returns and the industry today must do a good job of educating the market and showcasing success stories to change the narrative.

Impact Investing is an opportunity for positive wide-scale change but also for doing more harm than good.

The ivory tower approach to impact investing is dangerous. Investors deciding “what” impact looks like and not understanding the roots of a problem can lead to projects which deepen rifts and wasted resources. This is especially dangerous in the current stage of the market where it seems impact investing must prove itself to higher standards than traditional investing.

Rodney Foxworth of Invested Impact challenges the community to focus in on systemic issues which deepen inequality and poverty — especially in the way fund managers invest in entrepreneurs. African American women are the fastest growing group of entrepreneurs at 322%, yet it’s enormously difficult for them and other minorities to raise funding (Fortune). The data has spoken. Entrepreneurs with lived experience have a better understanding, passion, and ability to outperform entrepreneurs who lack the above. Who can investors learn from? Impact America Fund (among a few others) has demonstrated entrepreneurs from non-traditional networks and backgrounds can build and scale investable companies.

Unclear definitions and terminology threaten the ecosystem.

The debate around definitions and terminology threaten scalability of impact investing. The market lacks a taxonomy of classifications and metrics. Understanding the right type of capital investees need at the right time will be key for new movers and building the ecosystem. Hear more on this from Brian Trestald of Bridges Ventures.

The Grand Challenge: Enabling the Entrepreneur

This 3-hour design exercise consisted of stakeholders around the room breaking down the deal side of the equation and figuring out what does and doesn’t work for finding, building, and scaling investable companies. Major takeaways included:

- Investing in entrepreneurs with lived experience in their markets

- Creating greater access to capital for entrepreneurs from non-traditional backgrounds

- Alternative deal structures and aggregating capital for different stages of a venture and markets

- Sharing tools and resources to create better awareness and execution of investable deals

This was a productive exercise; however, I couldn’t keep coming back to the fact that there were players in the space that had already cracked the code of enabling entrepreneurs. The venture capital firm Village Capital (complete transparency: I’m interning here) has baked these values into their program. Here’s how.

Breaking the pattern:

75% of VC funding goes to three states: New York, Massachusetts, and California. 90% of Village Capital investments occur outside those three regions across 38 states with 43% of founders being women (compared to the average venture fund’s 17%).

Village Capital like others makes investments in companies using equity and debt instruments; however, understanding that different companies grow at different rates, they’ve used alternative deal structures to better support their portfolio companies. Learn more about a revenue-share agreement with Fin Gourmet in the Midwest.

They’ve proven that creators, armed with the right tools, are often the best judges of whether or not an entrepreneur should receive investment. Through their investment-readiness program, entrepreneurs in their cohort rank companies based on progress and potential; across 70 early stage investments, 13 have exited and 90% are still living.

So what?

Although not every organization has the capacity to have program like Village Capital’s…there are tools and resources out there to better prepare the investors you report to, the founders you support, and the larger ecosystem you play in. A couple of great places to start learning:

- What do creators know about investment? Peer Selection Criteria

- Identifying your blindspots: Village Capital’s book.

- The Venture Investment Readiness and Awareness Level framework

- Report: What’s Working in Acceleration

The Good Capital Project has launched.

This event was the first of its kind. Bringing all stakeholders together and defining problems was the first step of an intensive, yet fruitful design process of creating scalable solutions in moving more capital towards solving the world’s most complex problems. I’m looking forward to the many steps to come.

Missed the event? Check out a visual overview here. Interested in attending the next event? Check out SOCAP later this fall.